If you’re thinking about putting some money aside each month to save for your retirement, then you’re making a very smart decision. In fact, you should attempt to start doing this as early as possible. While attempting to figure out exactly how much you are likely to retire on is challenging, it’s always worth getting a rough idea.
You can use our retirement calculator to ascertain how much you can save based on a number of factors, such as your age, the amount you plan to save each month, and the current tax breaks available.
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What to consider when using the Retirement calculator?
Trying to work out how much you are going to retire on is a lot more difficult than simply calculating returns on an investment. The reason for this is that there so much to factor in. Before entering your details into the retirement calculator, make sure that you consider the following.
Current Age and Retirement Age
By entering the age that you plan to start saving for your Golden Years, as well as the age that you plan to retire, it will allow you to estimate how long you’ll be saving for. The key challenge here is that it is challenging to know what age you are likely to retire. While many of us get to choose when we stop work, your personal circumstances later on in life might not allow that. Try to be as realistic as possible.
Current and regular retirement savings
You will first need to consider how much you currently hold in retirement savings. This is a lump sum that you already have saved in a retirement-based account. After that, you then need to think about how much you are likely to set aside each month for your retirement account. Once again, nobody can predict the future, so try to be as accurate as possible.
Current and expected future earnings
It is important that you enter your current salary into the calculator, as this has a direct link to the tax savings you can make when injecting regular investments. Moreover, if you’re at the infancy of your working career, then its likely that your income will increase over time. Try to estimate at what rate you expect your income to increase each year and enter it into the retirement calculator.
Expected Tax Benefits
As you will be making tax-efficient savings on your retirement account, the current rates on offer should also be considered. However, this is likely to change over the course of time, so it’s best to just enter the current rate, rather than trying to predict what this will change to in the future. You should assess what tax rate you will need to pay when you eventually access your retirement savings.